NTPC takes big strides in renewable energy

NTPC Ltd figures among the world's top 10 coal-based power generators but in less than two years it will have an impressive portfolio of 1,000 Mw of green energy, too. It is already one of the top green power generators among the conventional power companies in the country, and soon enough will turn out to be a classic case of a "polluting" company becoming "cleaner".

Some 110 Mw of solar power generation places it next to Reliance Power that has around 185 Mw renewable energy capacity with Tata Power (read Part IV of the series) topping the list in this category. Being a government-controlled entity, most of this change is driven by directives from the Centre. It is obligated to facilitate addition of another 10,000 Mw of clean power in the next five years. For NTPC, that has often faced barbs for having a fourth of India's coal power generation capacity of 169,118 Mw, venturing into green space is a calculated move.

Though a request for an official interaction with NTPC's officiating chairman on the company's green business did not get any response, its former chairman Arup Roy Choudhary says it helps "the political dispensation of the country to tell the global audience that our biggest power producer is also into solar energy". Roy Choudhary headed the company for five years starting August 2010, a period which coincided with the Union government's focus on solar power programmes.

The diplomatic gain in climate negotiations is, however, not the only trigger. Choudhary says branching into renewable is also part of the company's social commitment. Besides, it synergises the company's target with the global requirements on diversifying into greener energy sources.

As a country, India could have done more of hydro but "we started late and now you cannot add hydropower because of rehabilitation and resettlement (R&R) issues," he says. With a growing population and pressure on land and river resources increasing, land acquisition is a major issue for hydro projects.

In NTPC's case, the company has only 800-Mw of Kol Dam project in Himachal Pradesh. Only small hydro projects with combined capacity of 8 Mw are being planned. Hydro projects below 25 Mw are counted in the renewable energy portfolio of companies.

Business strategy also demands expansion into renewable energy since it is faster to set up green capacity. The construction period for solar projects is a few months only and since they are modular, capacity can be added faster. "It is also easier to get clearances for land and environment for these projects. Besides, there is easy availability of funding," says N K Sharma, chief executive officer of NTPC Vidyut Vyapar Nigam Ltd (NVVNL), a wholly-owned power trading subsidiary of NTPC.

NVVNL performs a crucial function in the sale of solar power in the country. It bundles such power bought at a current average rate of about Rs 10.5 a unit (kilowatt per hour) with coal-based power resulting in a bundled tariff of about Rs 4.5 a unit. Through this mechanism devised in 2010, it is currently bundling some 723 Mw of solar power. NTPC, on its own, will also be bundling 500 Mw from 10 projects to be set up at Ghani Solar Park in Andhra Pradesh under the National Solar Mission. The average tariff for 500 Mw will be Rs 4.63 per unit of electricity. NTPC has the government approval to use cheap power of Rs 1 per unit from its Singrauli coal plant in Uttar Pradesh with solar power.

According to Sharma, bundling of power has three-fold advantage. It brings down the cost of power, ensures continuous availability of electricity despite the unreliability factor in green power and eliminates the need to subsidise through generation based incentives or viability gap funding.

Under NTPC's business plan, about 1,000 Mw capacity addition will be based on renewable resources by 2017. NTPC has already commissioned 110 Mw solar photo voltaic (PV) projects and another 15 Mw solar PV and 8 Mw Singrauli small hydro projects are under implementation. Besides, a geothermal project at Tattapani is also being developed under an agreement with the Chhattisgarh government. Since geothermal energy is derived from the heat under the Earth - which could range from shallow ground to hot water and hot rock found beneath the surface, or deeper to the very high temperatures of molten rock called magma - it is considered a clean source for power generation.

Besides grid-connected green generation, emphasis is also on off-grid decentralised power supply. The company has 16 such projects with a combined capacity of 340 kilowatt that reach out 2,280 households in four states.

The company wants to have 28 per cent of installed capacity coming from non-fossil sources by 2032 from less than one per cent now. Still, renewable portfolio, in general, will not be a challenge to coal-based generation. "Green energy will be a significant part of any conventional energy company's portfolio. It has yet not reached that stage (of being a challenge) since issues relating to availability of renewable power round the clock with storage technology still being expensive remain unresolved. There has to be a mix but the gap will be huge for some time," says Sharma.

The availability and cost factors, however, would not obviate the need to be conscious of adding to green portfolio and factoring it into corporate growth plans.

Increased use of natural gas for power generation and supercritical technology for coal-based generation will also help the company reduce its carbon footprint.